Correlation Between First Trust and BlackRock Total
Can any of the company-specific risk be diversified away by investing in both First Trust and BlackRock Total at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Trust and BlackRock Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and BlackRock Total Return, you can compare the effects of market volatilities on First Trust and BlackRock Total and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Trust with a short position of BlackRock Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and BlackRock Total.
Diversification Opportunities for First Trust and BlackRock Total
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and BlackRock is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and BlackRock Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Total Return and First Trust is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Trust Exchange Traded are associated (or correlated) with BlackRock Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Total Return has no effect on the direction of First Trust i.e., First Trust and BlackRock Total go up and down completely randomly.
Pair Corralation between First Trust and BlackRock Total
Given the investment horizon of 90 days First Trust Exchange Traded is expected to under-perform the BlackRock Total. In addition to that, First Trust is 1.28 times more volatile than BlackRock Total Return. It trades about -0.05 of its total potential returns per unit of risk. BlackRock Total Return is currently generating about -0.06 per unit of volatility. If you would invest 5,060 in BlackRock Total Return on November 2, 2024 and sell it today you would lose (87.00) from holding BlackRock Total Return or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. BlackRock Total Return
Performance |
| Timeline |
| First Trust Exchange |
| BlackRock Total Return |
First Trust and BlackRock Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and BlackRock Total
The main advantage of trading using opposite First Trust and BlackRock Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, BlackRock Total can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BlackRock Total will offset losses from the drop in BlackRock Total's long position.| First Trust vs. MFS Active Exchange | First Trust vs. Vanguard Intermediate Term Treasury | First Trust vs. Vanguard Long Term Treasury | First Trust vs. Vanguard Short Term Treasury |
| BlackRock Total vs. iShares ESG Aggregate | BlackRock Total vs. iShares ESG Advanced | BlackRock Total vs. iShares ESG Advanced | BlackRock Total vs. iShares ESG USD |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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